8. a. Write a note for $500 payable 2 years from date Aug. 25, 1920, with interest payable semi-annually at 8%. On the back, record the following payments: Aug. 25, 1921, $100; Feb. 25, 1922, $150.

b. Assume that the interest is paid each time it falls due. Determine the amount of interest due on each interest-payment date, up to and including Aug. 25, 1922. c. What is the balance of the principal which is due on Aug. 25, 1922?

9. a. Write a note for $800 payable 3 years from date, Sept. 1, 1921, with interest payable semi-annually at 6%. On the back, record the following payments: Mar. 1, 1922, $200; Sept. 1, 1922, $100; Mar. 1, 1923, $100; Sept. 1. 1923, $200; Mar. 1, 1924, $100.

b. Determine the interest due on each of these dates and the amount due on Sept. 1, 1924.

61. The United States Rule may be employed when finding the amount due at maturity in case payments are made at irregular intervals and in case it is assumed that the interest is to be taken out of these payments.

Rule. 1. Find the amount of the face of the note to the time when the payment or the sum of the payments made equals or exceeds the accrued interest.

2. From this amount, subtract the payment or the sum of the payments.

3. Consider the remainder the new face of the note and proceed as before up to the date of the settlement.

Example. What amount was due on July 27, 1921, on a note for $1500, dated Jan. 20, 1918, bearing interest at 6%, on which payments were made as follows: March 10, 1919, $250; Oct. 22, 1919, $25; Jan. 15, 1920, $150; Aug. 15, 1920, $100?

102.00

2. Int. on $1500 from 1/20/'18 to 3/10/'19 at 6% or
the int. at 6% on $1500 for 1 yr. 1 mo. 18 da.
3. ..the amount due on 3/10/'19 (adding)
4. 1st partial payment

5. Subtracting, the new face of the note
6. Int. on $1342 at 6% from 3/10/'19 to 10/22/'19
(Since the payment made on that date was less
than the interest, the payment was not sub-
tracted.)

7. The int. on $1342 from 10/22/'19 to 1/15/'20
8. Total amount due on 1/15/'20 (adding). .
9. The sum of the 2d and 3d partial payments .
10. Subtracting, the new face of the note
11. The interest on $1235.44 from 1/15/'20 to 8/15/'20
12. Amount due on 8/15/'20 (adding)

13. The 4th partial payment

14. Subtracting, the new face of the note

15. The interest on $1178.68 from 8/15/'20 to 7/27/'21 16. the amount due on 7/27/'21 (adding)

=

=

EXERCISE 54

Find the amount due on the date of settlement of each of the following notes, using the United States Rule.

1. Note dated July 15, 1921. Face of the note $1000. Interest 6%. Payments: Payments: Nov. 15, 1921, $75; Feb. 15, 1922, $100; Aug. 15, 1922, $200. Find the amount due on Dec. 15, 1922.

2. Find the amount due on Dec. 21, 1921, on a note for $750, dated March 15, 1921, bearing interest at 6%, on which $150 was paid on July 3, 1921, and $250 on Oct. 21, 1921.

3. On Jan. 12, 1921, a note was issued for $350, with interest at 6%. On Aug. 12, 1921, $25 was paid; on

Nov. 30, 1921, $100 was paid; on April 11, 1922, $150 was paid. What was due on July 17, 1922?

4. On a note for $2000 dated Feb. 21, 1920, with interest at 6%, $500 was paid on Feb. 14, 1921; $50 on June 14, 1921; $250 on Aug. 14, 1921. Find the amount

due on April 20, 1922.

5. On a note for $450 dated Jan. 3, 1921, with interest at 6%, $20 was paid on July 15, 1921; $50 on Nov. 21, 1921; $75 on June 27, 1922. What was due on Oct. 3, 1922?

VIII. INVESTING MONEY

62. Investing money means to use money to earn more money. The money earned is called interest or income.

Placing money in a savings bank is one of the best ways to invest small sums of money. After $100 or more has been saved, the owner can choose among other ways of investing it. Some of these ways will be discussed in this chapter.

Safety is the first consideration when investing money. Inexperienced persons are defrauded annually of large sums of money by being persuaded to invest in uncertain or fraudulent ventures. The average person should consult a reputable banker before making an investment. The safe investments do not offer as large interest return usually as those which are uncertain.

INVESTING IN BONDS

63. A bond is one of the safest investments. A bond is a promise to pay a definite sum of money, called the face value, on a definite date, the date of maturity, with interest at a definite rate per cent of the face of the bond. Bonds are given to investors in return for money loaned by the investor to a firm, a city, or a government.

Thus, during the war with Germany, the United States Government, borrowing large sums of money, gave its Liberty Bonds to the persons who loaned the money. The Government issued the bonds; the investors bought bonds. Each such bond contained the promise of the Government to repay the amount loaned to the Government, at a certain time, with interest at a certain rate, payable semiannually.

Municipal and government bonds have behind them the honor of the community or government. They are

considered a most safe investment. The interest rate therefore is usually low.

Corporation bonds, issued by firms, railroads, electric power companies, etc., are made safe by a mortgage on the property of the company. This means that the company agrees to turn its property over to the owners of the bonds, in case the bonds are not paid off when they mature. The safety of the investment depends upon the value of the property and the success of the business of the company. The rate of interest is usually higher than for municipal and government bonds.

Bonds are of various denominations. One promising to pay $100 is called a $100 bond; one promising to pay $5000 is called a $5000 bond.

Thus, the owners of some property, needing $100,000, borrow it from a banker, offering their property as security. The banker prepares bonds, whose total face value is $100,000. For example, there may be ten $5000 bonds; twenty-five $1000 bonds; thirty $500 bonds. You will find that the total of these is $100,000. The dates of maturity may not all be the same; in fact, they probably are not. The rate of interest is usually the same in all the bonds.

A registered bond has a place for the purchaser's name. The purchaser's name is recorded on the books of the company issuing the bond. In this way, the owner of the bond is protected against loss or theft of the bond. Also, in such cases, the interest, when due, is sent to the owner of the bond.

A coupon bond has a coupon attached to it for each interest payment that will fall due upon it. When the interest falls due, the coupon is cut off and cashed at any bank. Such bonds must be kept in a safe place, for if they are lost or stolen the owner must stand the loss.

66

Most Liberty Bonds are coupon bonds, but they may be registered

as to principal." They should be registered or stored in a safe place.